The declining trend of interest rates has been taking shape after two successive reductions in the intervention interest rate by the National Bank. It's a tendency that will help managers of monetary mutual funds to gain a competitive edge on the market.
Such companies are expecting the yields of funds they manage to stay behind, that is be higher, as compared to the other existing investment alternatives.
"The drop in interest rates will benefit investors in funds holding fixed-income instruments because they will profit from the past high interest rates for a longer period," says Dan Nicu, a director with SG Asset Management, the investment management company of BRD-SocGen. The company manages the Simfonia 1 fund, with investments in T-bills, bonds and banking deposits. Since the beginning of this year, Simfonia has witnessed an 8% increase.
In less than a month, the NBR's intervention rate, applied to deposits attracted by banks for a one-month term, shrank from 21.5% to 20%.
The first market signal with regard to this diminishing of interest came on Tuesday during the one-year maturing T-bill tender organised by the Finance Ministry. The interest carried by T-bills, which were sold on Tuesday, dropped for the first time this year to below 17%, with banks buying the issue at an average yield of 16.88%. Two months ago, interests on T-bills maturing in one year stood at 18%. T-bills with an 18% yield can also be bought at present, in an indirect way, by buying participation stock in funds that hold such instruments.
Another advantage of monetary funds is that they include bonds. Even though their interest is adjusted in line with market interest rates, this rate modification is done only periodically, on a quarterly or half-yearly basis.
"Yields produced by funds will similarly go down, but they will demonstrate greater inertia. About 60% of the investments made by BCR Clasic fund carry rates of interest that are calculated with a delay," says Doru Puiu Tiberiu, a director with BCR Asset Management.
The company manages two mutual funds of which one, BCR Clasic, has a monetary profile, having seen an 8% increase since the beginning of the year.
Bonds issued by Bacau municipality one month ago, for instance, carry a 21% interest rate for the first coupon, calculated as a function of the inter-banking market interest. The same calculation formula would now produce a 20% interest yield that might keep going down. However, Bacau city hall will have to make the same interest payments, of 21%, until the subsequent interest adjustment next March.
vlad.nicolaescu@zf.ro
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